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Greenleaf Foods COO: 'We're seeing turkey consumption down across the board'

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Greenleaf Foods COO Adam Grogan joins Yahoo Finance Live to discuss plant-based meat consumption and the increasing trend toward these options even from "flexitarians" who also eat meat.

Video Transcript

[MUSIC PLAYING]

SEANA SMITH: When you think of the Thanksgiving holiday, a lot of people-- I'm sure you do-- think of eating turkey meat, but more and more people are actually choosing meatless options. They're going the plant-based versions every year. We want to send it over to our reporter, Ali Canal, who is joined by a very special guest on this. Ali?

ALEXANDRA CANAL: That's right, Seana. I mean, some people out there actually have meatless options on Turkey Day, some meatless turkey. It's a phenomenon that's happening. And joining me now to discuss is Adam Grogan. He's the COO of Greenleaf Foods, which is the plant-based division of Canadian consumer food company, Maple Leaf Foods. Adam, thank you so much for joining us.

I mean, the US Department of Agriculture noted a decrease in frozen turkey inventories this year, down about 25% below the three-year average volumes. What have you guys been seeing in terms of consumer trends? Is this a sign that more Americans will be going meatless this year for the holiday?

ADAM GROGAN: Well, Ali, firstly, thank you for having me. Really fortunate here to represent Greenleaf Foods. We are seeing turkey consumption over the last number of years down across the board. It's down about 20% over the last number of years, the last 25 years. And turkey costs are up quite significantly, up about 25%.

And right on top of that, we have huge interest and desire by consumers to have more plant-based options. 93% of all new consumers that are coming into our space are actually meat eaters. So we call them-- lovingly call them flexitarians. So right now, we're seeing an explosion of plant-based roasts that are made for the holidays, both for Thanksgiving and the Christmas time frame.

Actually, in the last year, it's up about 48%. So when you compare that with some of the turkey sales and the cost on turkey, it's a really amazing category. And it's one that we are really fortunate to be participating in.

ALEXANDRA CANAL: You mentioned prices, and I want to dive a little deeper on that. As you said, turkey prices are over 20% higher this year, but how has the alternative meat category fared amid these various price increases, especially when we compare that to some of the more traditional players and traditional meat?

ADAM GROGAN: Yeah. Well, meat costs across the board are up quite substantially, around 12%. For us in plant-based, obviously, we've-- we're also facing a number of cost increases, a combination of labor and input costs. So-- but we've fared a little bit better relative to the animal-based protein.

So although we're facing a significant headwind in cost and cost increases, I think the large driver of consumption for plant-based products right now is really a lot more to do with health and wellness, more specifically around concerns about the environment. And then there's always those individuals in your household-- vegans or vegetarians or plant curious individuals-- who join the table, and we always say they have the veto vote because it's probably the number one thing that's on Americans' minds is what do you serve the vegan or vegetarian around the table? And it can't just be mashed potatoes and pasta.

So we're seeing a big uptick in plant-based roasts and a number of things. And I guess the plant curious of the animal eater-- plant-based eaters are also trying it, as well. And we've got a-- we try not to necessarily mimic turkey, animal-based turkey.

We-- we're in more of the roast category, so we tend to make products that are with hazelnuts and cranberries and all those wonderful flavors that you would come to expect from Thanksgiving. And it's just a wonderful product line that I think both meat eaters and plant eaters alike love to enjoy at this time of year.

ALEXANDRA CANAL: Yeah, there's certainly been a significant interest in plant-based options. Even anecdotally within my own circle, I've seen it. But I do want to talk about this because the Greenleaf Foods division had 6.6% fewer sales in the most recent quarter compared to last year. And then in the previous quarter from that, you guys reported a drop in sales of 20.6% verse 2020.

And it's not just Greenleaf that's facing these headwinds. We've seen Beyond Meat cut their Q3 guidance. So why this slowdown, you think, in the plant-based sector overall?

ADAM GROGAN: Well, we're really evaluating that right now. I think it's important, though, for some context. Over the last couple of years, the category has reached a high of a year-over-year sales growth of 100-- at some points is hitting 100% growth since 2019. And while many other categories have had what I deem to be a COVID bump, where it's kind of gone up and come back down, the plant-based category is rela-- stayed relatively stable at an elevated level.

So there's been a slight decrease in the category of consumption in the last-- over the last year. I think that a little bit of that is to be expected. We're evaluating that right now and making sure that we do the work that's required to really understand what are those issues that the category is facing, but a lot of it comes down to some basic concerns.

I mean, obviously, the categories being impacted by labor issues, both at retailers and in food service, has really stymied some of the innovation and growth that we were seeing prior to the pandemic. But there's one thing that's certain, and that is that the world needs more plants. By 2050, there's going to be 9 billion people on this planet.

We have a whole new generation of consumers that are interested in mixing their plates with both animal-based proteins, as well as plant-based proteins. And so I think there's an incredible tailwind here. We'll see how that progresses over the next couple of years. We're just kind of working through that work ourselves.

But we're really excited about the future of plant-based proteins. And I think you and your own family experience is probably also a great indicator that this is something that's here for many, many years to come.

ALEXANDRA CANAL: Right. And finally, Adam, just real quickly, to follow up on some of the challenges you guys have seen with the labor shortage, supply chain issues, how have you handled those things that have come up? And how are your issues and challenges different from some of the traditional players? Are you, being a plant-based company, more insulated from traditional meat companies? How are they different?

ADAM GROGAN: Well, first and foremost, we are very fortunate. We have over 600 associates across the country. We have facilities in Washington state, in Massachusetts, and we're building a new one in Indiana. So we have employees all over the United States. And what's really super important for us is their safety, first and foremost.

I think, obviously, the meat industry has been impacted by a number of issues around employee safety and labor and the ability to access labor. We're really fortunate in that we have a really strong and stable supply base. That's not too often in plant-based proteins.

Typically, you'll see a lot of companies that exist that are using co-manufacturing. We own our own supply chain. We own our own production.

So although we've seen many of the similar concerns, I think where we're insulated a little bit is that we're in the assembly business, and we have-- we've obviously used-- made sure that most of our employees are really safe. And that's our number one priority.